Wednesday, March 20, 2013

APRIL 12, 1866 – CONGRESS PASSES THE CONTRACTION ACT

1866 – CONGRESS PASSES THE CONTRACTION ACT
The Act authorized the Secretary of the Treasury to begin retiring Greenbacks
(public debt-free money first issued by the Lincoln Administration) in
circulation and to contract the money supply. By 1876, two-thirds of the
nation's money had been called in by the bankers. A contraction of the money
supply when demand is high causes depressions, which is what happened from
1873-79.